[_dimi_]

A few thoughts after I've had time to absorb most of the info

1. With HW break-even point of 3 million at 315 ASP, albeit still a stretch once you're in a downward spiral like BlackBerry, I really hope they pull it off. I prefer a BlackBerry with a HW business, but it needs to be profitable. The fact that JC has now set a September deadline is very reasonable imho. Still unsure how he wants to get to 750000 units per quarter at 315 ASP if he's not introducing other devices though. He's now at 600000 units. What are JC's options here, Morgan? I don't think their enterprise sales force will make up for the difference. They haven't overdelivered so far, so I don't think this will happen over the next 6 months either. Could it be that JC has a margin to work with regarding ASP (perhaps estimated < actual, or is that wishful thinking?) or their new accounting policy for PRIV could result in higher revenue?

2. With BlackBerry still unprofitable, can we expect a tax credit in 2016, Morgan? I've grown used to them; and want one ASAP!

Posted via CB10

[W Hoa]

With HW break-even point of 3 million at 315 ASP

That's an important piece of information if correct. Almost one billion dollars a year to support hardware break-even? Currently, it seems, BlackBerry is losing about $300 million a year on device sales. And even that figure is in a constant state of flux. I agree with you about keeping BlackBerry in the hardware business. To some extent. But you can see why others are insisting that the hardware be jettisoned.

[Elephant_Canyon]

OK, but please don't use words with a lot of letters because English isn't my first language. Thanks.

[world traveler and former ceo]

That's an important piece of information if correct. Almost one billion dollars a year to support hardware break-even? Currently, it seems, BlackBerry is losing about $300 million a year on device sales. And even that figure is in a constant state of flux. I agree with you about keeping BlackBerry in the hardware business. To some extent. But you can see why others are insisting that the hardware be jettisoned.

Indeed. He does say they have come a long way and they are getting close.... I do worry that perception that they "may be getting out of hardware" soon will play on the minds of some.... perhaps many?...even BlackBerry users on Crackberry are says this on other threads.... further impacting on the sales going forward.

Personally, I prefer the business model where they do become profitable and stay in the niche mobile phone hardware business due to synergies with their other services , IOT devices, etc. This is important and Chen knows it!!

However, CEO Chen will know well before September how realistic this is and hopefully will make the tough decisions on how best to proceed, with stake holders / shareholders best interests in mind... any white knights out there?! Strategic partners out there?? ...


Posted via CB10
Attachment 395968

[world traveler and former ceo]

I agree with what you're saying, somewhat.
BlackBerry has built a top-notch phone with a secure version of Android. Unlike the Z10, it is being praised for its quality. As with the counter-argument to BB10 being a "enterprise" device, enterprise customers are consumers with families as well. It was important to get a good, solid device out and start the positive brand image again. People who receive Privs through work will show them to their friends. Maybe their friends say "wow, it's nice, but too expensive for me", but at least they give the BlackBerry brand credit again

This gives BlackBerry a good play moving forward. They already have an Android OS, and they're starting to create positivity around the brand. If they can release an affordable device now (and one they can afford to produce more inventory of), they might be able to gain new customers and improve carrier relations/distribution.

What's disappointing, is that Chen doesn't even have a device in mind for this situation. He's talking about what he's considering. There needs to be a mid-range device NOW, as it's obvious the Priv is not for everyone (price-wise)

What makes you think a "mid range android" would be received any differently? It would be criticized as low end with mid range pricing... aka LEAP... that is the essence of the problem now isn't it? Once you are in a commodity business price matters a lot to many. Their best chance was the value proposition of a high end model (imo).. but most comments from consumers or businesses are about price..."PRIV too costly" comments ... Rather than quality or features....

BlackBerry can't seem to compete (sufficiently) at a price point that is profitable for them to sell in large volumes, imo. Can chen change this by selling more directly to enterprises and governments and regulated industries, bypassing "middlemen"?

Could a PRIV 2 at reduced price point while still maintaining high ASP be competitive? They have invested a lot to get "this close", as CEO Chen alluded to. But competition waits for no one... and perception turns to reality very quickly...(aka Heins).

Or is their HW phone business cost base and infrastructure just too high in today's competitive environment for them to continue to go it alone?

Posted via CB10

[spiller]

A few thoughts after I've had time to absorb most of the info

1. With HW break-even point of 3 million at 315 ASP, albeit still a stretch once you're in a downward spiral like BlackBerry, I really hope they pull it off. I prefer a BlackBerry with a HW business, but it needs to be profitable. The fact that JC has now set a September deadline is very reasonable imho. Still unsure how he wants to get to 750000 units per quarter at 315 ASP if he's not introducing other devices though. He's now at 600000 units. What are JC's options here, Morgan? I don't think their enterprise sales force will make up for the difference. They haven't overdelivered so far, so I don't think this will happen over the next 6 months either. Could it be that JC has a margin to work with regarding ASP (perhaps estimated < actual, or is that wishful thinking?) or their new accounting policy for PRIV could result in higher revenue?

2. With BlackBerry still unprofitable, can we expect a tax credit in 2016, Morgan? I've grown used to them; and want one ASAP!

Posted via CB10

I estimated 900-1M devices sold so I was a bull on hardware doing ok and surviving until yesterday.


They sold something like 350-450K Privs this quarter and asp didn't rise.

Without a new device and after launch demand this has nowhere to go but down. 400-500K devices total this coming quarter. Chen guided up on hardware rev from q3-q4 and misguided badly. This time he's not guiding. I don't think Chen will risk the cost to launch a mid range after q1 numbers but he should launch it now before the hardware media story gets worse after q1 or not at all. Get out that mid range pkb android as your last shot. But he's now saying z30 body so sounds like all touch. I guess that is enterprise secure android targeted. Else license the hardened android and pkb IP before it's worth less....



Posted via CB10

[Merboy6969]

With all this HW talk and discussion it made me think. 3mil is the magic number to break even. Maybe Chen is waiting to see what traction the newly announced Radar will have(and/or other IOT initiatives not yet announced). I heard him mention in one of the interviews yesterday (I think with Amber) that those devices are simply phones without the dialing capabilities and that is why he likes to stay in HW because their development also opens up alternative device uses and streams. Should we not start thinking about overall device sales to achieve that 'break even' status instead of focusing only on the smartphone sales?

Anyway just some random thoughts while drinking my morning coffee and catching up on the posts.

Cheers

Posted via CB10

[W Hoa]

Should we not start thinking about overall device sales to achieve that 'break even' status instead of focusing only on the smartphone sales?

That is an important distinction and one that will no doubt change the focus of the debate. Perhaps Chen should take the opportunity to reshape the conversation.

[anamar_97]

Posted via CB10

[early2bed]

With all this HW talk and discussion it made me think. 3mil is the magic number to break even. Maybe Chen is waiting to see what traction the newly announced Radar will have(and/or other IOT initiatives not yet announced).

In the smartphone business, any CEO that even utters the words "waiting to see" should be fired. If John Chen doesn't know what to do with his hardware strategy then it's done. Even selling the hardware business isn't an option anymore since 3 million units a year isn't worth trying to get it past Canadian regulators so it's likely to just be shut down. If it had been sold several years ago to Samsung or Huawei, a lot of those Canadian employees would still be working and investors would have received at least twice as much as they have today. Remember, we were talking $15 to $18 per share for the acquisition.

[world traveler and former ceo]

In the smartphone business, any CEO that even utters the words "waiting to see" should be fired. If John Chen doesn't know what to do with his hardware strategy then it's done. Even selling the hardware business isn't an option anymore since 3 million units a year isn't worth trying to get it past Canadian regulators so it's likely to just be shut down. If it had been sold several years ago to Samsung or Huawei, a lot of those Canadian employees would still be working and investors would have received at least twice as much as they have today. Remember, we were talking $15 to $18 per share for the acquisition.

Link to acquisition offer of $15-18 please...

Posted via CB10

[early2bed]

Link to acquisition offer of $15-18 please...

My bad: it was more like $13 to $15 but the potential buyers were all of the big guys in mobile and there easily could have been a bidding war but Blackberry squashed all of those rumors early and the Canadian government would have stood in the way. It's still twice as much as the stock is worth today.

Corrected - Samsung talks to BlackBerry about $7.5 billion buyout - source | Reuters
Microsoft has thrown a $7 billion USD offer to acquire Blackberry
Lenovo Approaches BlackBerry - WSJ

[Superfly_FR]

That is an important distinction and one that will no doubt change the focus of the debate. Perhaps Chen should take the opportunity to reshape the conversation.

He did, last quarter when he corrected himself during an ITW using "smartphone business" against "hardware".
Sign'O the times ?

[cjcampbell]

My bad: it was more like $13 to $15 but the potential buyers were all of the big guys in mobile and there easily could have been a bidding war but Blackberry squashed all of those rumors early and the Canadian government would have stood in the way. It's still twice as much as the stock is worth today.

Corrected - Samsung talks to BlackBerry about $7.5 billion buyout - source | Reuters
Microsoft has thrown a $7 billion USD offer to acquire Blackberry
Lenovo Approaches BlackBerry - WSJ

That was for the company, not the hardware division.

Posted via CB10

[Superfly_FR]

My bad: it was more like $13 to $15 but the potential buyers were all of the big guys in mobile and there easily could have been a bidding war but Blackberry squashed all of those rumors early and the Canadian government would have stood in the way. It's still twice as much as the stock is worth today.

Corrected - Samsung talks to BlackBerry about $7.5 billion buyout - source | Reuters
Microsoft has thrown a $7 billion USD offer to acquire Blackberry
Lenovo Approaches BlackBerry - WSJ

None have been acknowledged as "real" by BlackBerry.
And if I remember correctly, I still ear Chen stating (the likes) "Under $15/shr : don't even think about it" when the "for sale" sign was up.

Edit : and yes, thx CJ, this was for the whole company, IP and network (to name samples).

[bungaboy]

OT: where's that bbjdog when ya need him?

[W Hoa]

OT: where's that bbjdog when ya need him?

He's preoccupied. It finally caught up with him

[bbjdog]

LMAO GUYS!

The dog is to busy dealing with his hang-over!

[_dimi_]

In the smartphone business, any CEO that even utters the words "waiting to see" should be fired. If John Chen doesn't know what to do with his hardware strategy then it's done. Even selling the hardware business isn't an option anymore since 3 million units a year isn't worth trying to get it past Canadian regulators so it's likely to just be shut down. If it had been sold several years ago to Samsung or Huawei, a lot of those Canadian employees would still be working and investors would have received at least twice as much as they have today. Remember, we were talking $15 to $18 per share for the acquisition.

If waiting to see means building down their inventory and purchase obligations, that's fine by me, because looking at their balance sheet, it'll take about 6 more months to work that down to zero. How much was that when JC took over? The hardware IP is still worth the same. And for a company a la Samsung that should be even more valuable than to BlackBerry, because they have the volume that BlackBerry don't.

Posted via CB10

[_dimi_]

None have been acknowledged as "real" by BlackBerry.
And if I remember correctly, I still ear Chen stating (the likes) "Under $15/shr : don't even think about it" when the "for sale" sign was up.

Edit : and yes, thx CJ, this was for the whole company, IP and network (to name samples).

Correct. He said the same yesterday to Amber: first share price must be representative of the value BlackBerry holds, if then there's interest, he needs to fulfil his duties to the shareholders.

Posted via CB10

[sidhuk]

LMAO GUYS!

The dog is to busy dealing with his hang-over!

Forgot to attached this?

Posted Via blackberry passport.

[bbjdog]

@Sidhuk, looks like bbjdog is high on some blue pill and scaring the lady. Lol

Posted via my BlackBerry Passport

[Klipspringers Shoes]

In the smartphone business, any CEO that even utters the words "waiting to see" should be fired. If John Chen doesn't know what to do with his hardware strategy then it's done. Even selling the hardware business isn't an option anymore since 3 million units a year isn't worth trying to get it past Canadian regulators so it's likely to just be shut down. If it had been sold several years ago to Samsung or Huawei, a lot of those Canadian employees would still be working and investors would have received at least twice as much as they have today. Remember, we were talking $15 to $18 per share for the acquisition.

Spot on. According to Guy Kawasaki's famous rules for being a CEO:

'Real CEOs demo'
'Customers cannot tell you what they want'
'If you can't demo, you're a loser'

Personally, I don't understand how Chen gets away with speaking in public. The major shareholders should have told him to sort it out ages ago. It's an embarrassment, and one that is costing shareholders a lot of money.


Posted via CB10

[3_M4N]

I haven't seen Nanthealth in the news recently. I wonder how distribution of the Hbox has been going and if there are any additional projects underway with Blackberry's involvement. I'm pretty sure the Hbox has been deployed for a while now, but I'm not sure if it's doing well or needs improvement. I was hoping to hear or see more information on the IoT & IoMT projects Blackberry is involved in. Hopefully all is well and they're gearing up for an announcement soon.

[morganplus8]

A few thoughts after I've had time to absorb most of the info

1. With HW break-even point of 3 million at 315 ASP, albeit still a stretch once you're in a downward spiral like BlackBerry, I really hope they pull it off. I prefer a BlackBerry with a HW business, but it needs to be profitable. The fact that JC has now set a September deadline is very reasonable imho. Still unsure how he wants to get to 750000 units per quarter at 315 ASP if he's not introducing other devices though. He's now at 600000 units. What are JC's options here, Morgan? I don't think their enterprise sales force will make up for the difference. They haven't overdelivered so far, so I don't think this will happen over the next 6 months either. Could it be that JC has a margin to work with regarding ASP (perhaps estimated < actual, or is that wishful thinking?) or their new accounting policy for PRIV could result in higher revenue?

2. With BlackBerry still unprofitable, can we expect a tax credit in 2016, Morgan? I've grown used to them; and want one ASAP!

Posted via CB10

Hi _dimi_ !!

I always enjoy reading your thoughts on the matter. I'm willing to bet that Chen has no thoughts of leaving hardware in Sept/2016. He is trying to buy time to make his plan work and I do believe that his version of breakeven occurs this year. His version will include a possible go it alone approach away from the reliance on MOST carriers where they seem to fail miserably. I believe ShopBlackBerry, Amazon and other online approaches to selling HW, along with financing, are the eventual outcomes of his strategy. He will look at 500,000 a Q and map out a strategy for mid to high tier phones that are sold at a profit along with a product to take to Enterprise.

I also think that many of us knew that a breakeven number like 5 MM was way out of line and needed to be updated. The media and analysts ran with that figure but you would have to be silly to believe it hadn't dropped on huge ASP gains in Q3. I think he has ways to reduce that number from 3 MM down to 2 MM before the year is out by following my online approach to the sales of phones. If you want a PRIV, a slab or a Classic, you will order it from BlackBerry, or, online for the most part with carriers who want to sell BB's, still carrying them. The ASP would jump high, much lower logistics for moving inventory and therefore a profitable business model at lower volumes. He could even spin off that HW business once he gets to that threshold of breakeven, or, sell the entire suite including patents for a decent price. Do you know how many companies were worth a $ 1 B bucks without a hope of turning a profit? Even our software EMM friends like MOBL and Good sold for high valuations with nothing going for them. The hardware business is profitable at some level as long as they match demand with a distribution system that works.

Look at Apple, what a mess, they are now dropping their base price to $ 399.00 with the same logistics to bring that handset to market. They will die using this formula. You get a phone that you already owned for 3 years, at a much lower ASP for Apple, and, you have to go through the same hurdles to sell that unit to consumers on mass. What a terrible mess they are in. I'm already shopping for my new iPhone 7 and its a 5s for $ 180.00 bucks! This idea is like BlackBerry coming out with a BB 9900. Sure that phone was cool, but times have changed and people are watching TV on their phones, there is zero reason to buy a phone from Apple on launch day, forget the lineups.

If BlackBerry took my advice and launched a separate company setup for a 299..00/Slab, a $ 399.00 PKB and a $ 999.00/high-end secure phone, they wouldn't launch a new one for two years minimum and each phone is profitable at an annual run rate 1,000,000 units, they would make good money. I don't care about Verizon/T-Mob or the rest, only carriers like Bell/Rogers get the phone or only third tier companies like Mobility etc., get the phone on a plan, a system that is simple, easy to inventory and sells without a massive fixed cost to run on BB's part. That works. You decide what lives and what dies, a Passport+?? maybe, a Z30+, a Classic+, a Priv+, you figure out what sells and that's it. I would have 85% of ads run online, little to nothing on TV, lots of launch stuff for online review and that's it. I noticed that no one here talks about BlackBerry direct ads on ABC Nightly News after 6:00 PM for the Priv. It was a great short mention of the Priv but no one here even mentioned it so dump the effort!

As for tax relief, we got $ 17 MM this Q for the restructuring but I'm afraid there is nothing for HW until they lose money on the blowout of inventory. It doesn't happen up front on a launch. Let's get all of the HW available around the world from one source, say Amazon and a couple of working solutions with carriers and the like. Then when you finally hit a home-run you can crank up the volume at your pace with new contracts going to carriers that matter.

Remember, Samsung and Apple can't play this game, they would go under.

PS. A special thanks to those of you who worked late last night rebutting the silly season arguments for why BlackBerry sucks, I grabbed a beer and didn't watch men's figure skating because your work was that good. Imagine how many iPhone users had nothing to distract them from skating last night ............